In our Federal Budget update in May we flagged the Government's plan to tax distributions from discretionary (family) trusts at a minimum rate of 30 per cent from 1 July 2028. Treasury has now released the consultation paper that will shape the final legislation. There is some genuinely good news in it for families weighing up whether to keep their trust or wind it up — and one large, unanswered question that matters more in Western Australia than almost anywhere else: state stamp duty.
In a nutshell
- The Budget plan to tax discretionary trust distributions at a minimum 30 per cent is on track to start on 1 July 2028; Treasury is consulting on the detail until 31 July 2026.
- Good news: families who restructure assets out of a trust will not pay capital gains tax on the way out, and the federal rollover relief will not be capped.
- The gap: the paper says nothing about state stamp duty — and WA is one of the two worst-placed states, charging duty on transfers of both real property and business assets.
- Industry bodies warn restructuring costs could run to hundreds of thousands of dollars — even millions — depending on the assets and the state. There is no need to rush: nothing starts for another two years.
A quick recap: what is changing
Discretionary trusts have long allowed families to spread investment and business income across beneficiaries, so some of it is taxed at lower marginal rates. Under the Budget measure, distributions from these trusts will face a minimum tax rate of 30 per cent from 1 July 2028 — removing much of the benefit of income splitting for beneficiaries on lower rates. Trusts will remain useful for other reasons (asset protection, estate planning, business succession), which is exactly why the keep-or-restructure decision needs care rather than speed.
What the consultation paper confirms
Two helpful things. First, families who decide the trust no longer earns its keep will be able to restructure assets out of the trust without triggering capital gains tax — a rollover relief that experts had feared might be capped. Treasury has indicated there will be no cap on the size of the relief. Second, the paper confirms the Government is still consulting on how the rollover will work in practice, including how distributions to tax-exempt bodies such as charities are treated. Feedback is open until 31 July 2026, with legislation to follow.
The gap: stamp duty is a state tax — and the paper is silent on it
Capital gains tax is federal; stamp duty belongs to the states. Moving a property or a business out of a trust is a transfer of ownership, and most states charge duty on at least some transfers — at full rates, with the relief question entirely unaddressed in Treasury's paper. Tax bodies including the National Tax and Accountants' Association and CPA Australia have called the result a “postcode lottery”: the same restructure could cost little in one state and hundreds of thousands of dollars — in some cases millions — in another.
| Where the trust's assets sit | Duty on real property transfers | Duty on business asset transfers |
|---|---|---|
| WA and Queensland | Yes — full transfer duty | Yes — duty applies here too |
| South Australia | No duty on non-residential property | No |
| Other states and territories | Yes, on all property | Generally no |
Broad summary of current state duty settings on transfers out of a trust, as reported at July 2026. Duty outcomes depend on the asset, the entities involved and any concessions — always get specific numbers before acting.
Why this matters most in WA
Western Australia charges transfer duty on real property and on business assets — putting WA (with Queensland) at the expensive end of the country for trust restructures. A family whose trust holds an investment property, a commercial premises or an operating business could face a six-figure duty bill to move those assets into personal names or another structure, even though the federal CGT relief applies. Unless the states agree to their own rollover relief — and none has — the stamp duty cost may be the deciding factor in whether restructuring makes sense at all. Some families will genuinely be caught between paying the new 30 per cent tax to stay in the trust, or paying substantial duty to leave it.
A note on charitable giving
Charities themselves are excluded from the minimum trust tax. However, under the Budget-night design, a charity receiving a distribution from a discretionary trust would not be able to claim back the tax the trust has already paid. Treasury is consulting on this treatment — worth watching if your trust makes regular charitable distributions.
Key dates
- May 2026 — Federal Budget announces the measure
- 9 July 2026 — Treasury consultation paper released
- 31 July 2026 — feedback to Treasury closes
- 2026-27 — legislation introduced
- 1 July 2028 — the 30 per cent minimum tax starts
What this could mean for you
If you have a family trust: do not rush to restructure. The CGT relief is confirmed, but the stamp duty position is not — and the tax does not start until 1 July 2028.
If your trust holds property: in WA, moving real property out of a trust can attract full transfer duty. Get the actual duty numbers before making any decision.
If you run a business through a trust: WA also charges duty on business asset transfers, so a restructure can cost more here than the same move would in most other states.
If you are weighing keep versus wind up: model both paths — the ongoing 30 per cent tax against the one-off exit costs — with us and your accountant, once the rules are settled.
This is the biggest change to trust taxation in decades, but it is a decision for the next two years, not the next two weeks. If your family uses a discretionary trust, please get in touch and we will work through what the new rules mean for your structure.
Navarino Wealth is an Authorised Representative (No. 377 450) of PFP Financial Services Pty Ltd, AFSL 535484. This article contains general information only and does not take into account your objectives, financial situation or needs. It is based on the 2026-27 Federal Budget, Treasury's July 2026 consultation paper and industry commentary current as at 10 July 2026; the measures described are proposals and may change before legislation is passed. Stamp duty outcomes depend on state law, the assets involved and available concessions. You should consider whether the information is appropriate for your circumstances, and obtain personal financial, taxation and legal advice, before acting on it.